Alter ego and joint partner trusts

An alter ego trust is a trust created after 1999 by a taxpayer during the taxpayer’s lifetime, but after he or she has attained the age of 65, under which the taxpayer is entitled to receive all of the income of the trust for the balance of the taxpayer, is entitled to receive or otherwise obtain the use of any of the income or capital of the trust prior to the taxpayer’s death. A taxpayer can transfer property to an alter ego trust on a rollover basis. However, on the death of the taxpayer that settled it, an alter ego trust will be deemed to have disposed of its property. www.insuranceplancanada.com

A trust will qualify as a joint partner trust if, at the time of the trust’s creation, the following conditions are met:

The taxpayer creating the trust was alive and had attained 65 years of age;

The trust was created after 1999;

The taxpayer or the taxpayer’s spouse was, in combination with the spouse or the taxpayer, as the case may be, entitled to receive all of the income of the truth that arose before the later of the death of the taxpayer and the death of the spouse; and www.insuranceplancanada.com

No other person could, before the later of those deaths receive o otherwise obtain the use of any of the income or capital of the trust.

Because assets can be "rolled over" to alter ego or joint partner trusts on a tax deferred basis, and because the assets they hold pass outside the settlor’s estate at his/her death, these trusts are considered ideal means of avoiding probate tax. Yet, caution is recommended as there are many potential income tax drawbacks that can outweigh

the probate savings.

www.insuranceplancanada.com

An alter ego trust is a trust created after 1999 by a taxpayer during the taxpayer’s lifetime, but after he or she has attained the age of 65, under which the taxpayer is entitled to receive all of the income of the trust for the balance of the taxpayer, is entitled to receive or otherwise obtain the use of any of the income or capital of the trust prior to the taxpayer’s death. A taxpayer can transfer property to an alter ego trust on a rollover basis. However, on the death of the taxpayer that settled it, an alter ego trust will be deemed to have disposed of its property. www.insuranceplancanada.com

A trust will qualify as a joint partner trust if, at the time of the trust’s creation, the following conditions are met:

The taxpayer creating the trust was alive and had attained 65 years of age;

The trust was created after 1999;

The taxpayer or the taxpayer’s spouse was, in combination with the spouse or the taxpayer, as the case may be, entitled to receive all of the income of the truth that arose before the later of the death of the taxpayer and the death of the spouse; and www.insuranceplancanada.com

No other person could, before the later of those deaths receive o otherwise obtain the use of any of the income or capital of the trust.

Because assets can be "rolled over" to alter ego or joint partner trusts on a tax deferred basis, and because the assets they hold pass outside the settlor’s estate at his/her death, these trusts are considered ideal means of avoiding probate tax. Yet, caution is recommended as there are many potential income tax drawbacks that can outweigh

the probate savings.

www.insuranceplancanada.com